Online Video Advertising is rapidly evolving, with a number of services stepping up to the challenge. But until now the approach has largely been based on a cost-per-mille (CPM) payment model. However, a new contender looks set to buck the trend.

LiveRail is a brand new video advertising platform, currently in a closed beta testing period. And the approach taken by this newcomer to the video advertising space is significantly different from the norm.

Unwieldy text-based ads are nowhere in sight, either in or outside of the video player frame. Tiresome pre-roll advertising, which forces viewers to watch an ad before the video proper begins, is gone. Pointless advertising tacked on to the end of the video, and subsequently ignored by viewers is mercifully absent.

So how exactly are these people proposing to make money for their advertisers and publishers?

The answer is a variation of the contextual model that has made Adsense as popular as it is today, and the key is in carefully targeting the interests of viewers.

Through the use of a smart algorithm, LiveRail serves up video advertising targeted by the content of the video, the language used, previously successful campaigns, and even the geographic location of the viewer.

The advertising served up is placed in thumbnail form discretely underneath the main video player. And here's the amazing part - it only plays if the viewer chooses to click on it. Likewise, the advertiser only pays out if a user chooses to watch their video, rather than being hemmed in by a cost-per-thousand impressions.

To learn more about this interesting approach to Internet video advertising, read on.

LiveRail - Overview

LiveRail is a London-based startup focusing on providing an all-in-one content hosting and video marketing solution for video publishers and advertisers on the web.

What that means for those publishing their videos online is a new way to upload, categorize, embed and monetize their video through the service. For advertisers, it provides an easy way to set up campaigns that are precisely targeted by such factors as language, viewer location and of course keywords and categories.

Both parties can easily upload their video content, have it transcoded into high quality Flash video, and store it for free with LiveRail. It is then in the best interest of publisher, advertiser and LiveRail alike to place appropriate advertising content alongside highly relevant videos to ensure the maximum revenue for all involved.

From what I have seen so far, I have every reason to believe that this may well prove to be an effective model. Force advertising down your audience's throat, and you are likely to make enemies fast. But place interesting (marketing) content in close proximity to a video they have already chosen to watch, and the possibilities for them to become interested suddenly grows.

But how simple is it to get up and running with LiveRail?

LiveRail For Publishers

From a video publishers perspective LiveRail makes it relatively simple to get your video content online, where it can be activated or archived for free. From there it is simply a matter of making sure that you accurately describe and categorize your content so as to ensure the best possible results in terms of placement and eventual revenues.

Preparing Content

The first thing you'll want to do is upload your video to the LiveRail servers. If you've ever published a video on YouTube or blip.tv this won't be unfamiliar to you, and if you haven't it is a straightforward enough procedure.

At the time of writing you can upload video in the following popular formats:

This covers all of the major video encoding formats, and even allows you to transfer and upload video directly from your mobile phone. Once you have uploaded your video it is transcoded by LiveRail into the Flash video (flv) format for bandwidth-efficient but high-quality web delivery.

Once your video is ready you can select which frame will be displayed in the still thumbnail of the video player before the clip begins. This is a nice touch that is absent from some of the major video sharing services.

Next up is the task of trying to focus and categorize the content of your video as best you can using primary and secondary categories, of which there are a great many, selecting the language of your video, and finally adding a description of your content.

It is possible to waltz through this whole experience in a matter of minutes, and the clean, simple interface leaves little room for confusion from beginning to end.

Finally, videos can be made 'active', which is to say available for advertisers to work with, or else put on hold by archiving them.

Archived videos can of course be activated at any time, and in this way, should you wish to, it is possible to rotate your content.

Monetization

Once your videos are active, you can follow exactly how much each video has earned from the LiveRail publishers' control panel. It is from this same straightforward control panel that you can choose to make a withdrawal of your earnings to date at any point. You will then receive those earnings by mail, sent to the address you established upon signing up to the service.

LiveRail For Advertisers

The process for advertisers, while slightly more complex, is nevertheless easy to breeze through in the space of minutes too. Creating a campaign is not entirely removed from the uploading process followed by publishers. From there, tracking and closely monitoring your spending, and the success of your campaign is also made simple.

Creating a Campaign

Putting a campaign together is as easy as uploading your video advertisement to LiveRail and filling in a couple of quick forms. Here you will enter the text copy for your ad, and the link you wish it to take your potential audience to upon click-through.

The video formats allowed are the same as for publishers, and the the end result of a transcoded Flash video file is also the same. Quality in my tests of the uploading service was consistently high, which makes for a nice change.

Of course just as publishers will be keen to closely target their content to attract advertisers, so advertisers will want to make sure that their content is as well focused, described and categorized as possible. LiveRail allows you to set primary and secondary categories in much the same way as publishers, and it is also wise to choose the language of your video.

Once you have dealt with the uploading and targeting of your advertising, you can begin making dollar bids on how much you are willing to spend per view of your video. Your bid, in competition with other advertisers, is then used to calculate how frequently and prominently your content will be displayed in the video preview windows beneath publishers clips.

If you are the highest bidder in a given category your bid is rounded down to just above the next lowest bidder, which means that high bidders could be surprised at how little under their initial bid they have to pay. If you are not the highest bidder in your chosen category, however, the system will show you an estimate of your relative position and allow you to alter your bid accordingly.

Monitoring a Campaign

When campaigns are up and running, advertisers can carefully monitor how much they are spending, how close they are to their set 'daily budget', and details of the amount of impressions served in relation to the amount of videos viewed, giving a click-through-rate accordingly.

This gives advertisers a clear idea about their position in relation to other advertisers, and the overall success of their campaign, and might be used to hone decisions as to the amount bid per view, and even the choice of category, depending on the overall results.

Video In Action

By far the best way to see LiveRail in action, of course, is to check it out for yourself. Here is the video player, complete with the advertising prompts beneath the main window. If the ads interest you, clicking on them will open a new player which allows you to watch them, before resuming the original content. New ads will then be served up beneath the video.

It is also possible to tag an advertising video for later viewing, which gives you the chance to effectively bookmark it for later consumption.

I personally would like to see these tagged videos taking a slightly less intrusive approach, however, as at present they appear over the current video and don't go away. A more pleasant solution would be to have the tagged videos appear upon rolling over the video window, and disappear when the cursor leaves the edges of the player.

Possible Drawbacks

One possible drawback to binding content hosting to advertising delivery is the requisite loss of control the publisher has over their video. What this means is that should a company or independent publisher have a significant amount of video assets tied into another hosting service, or hosted on their own servers, they are going to need to transfer all of this content to LiveRail.

Furthermore this means that any control over the encoding, video dimensions and quality of the video being broadcast must ultimately be left in the hands of LiveRail.

This is by no means unique, and the way that the vast majority of services operate requires that publishers upload their content to multiple hosting destinations. Efforts such as not been without its critics.

If you don't require precision control over the dimensions and encoding of your video - and let it be said that the quality of LiveRail video is very high - this possible drawback won't trouble you, especially if it is offset by a steady stream of ad revenue.

Conclusions

LiveRail offers a novel solution for video publishers looking to monetize their work and advertisers looking to precision-target their marketing message alike.

The defining feature of this video advertising solution is its movement away from the CPM advertising model, and towards a new and potentially successful approach.

Contextually placed advertising is positioned in thumbnail format beneath the main content, and advertisers are only charged when viewers choose to watch the video-based commercials. As such, the likelihood of a good conversion rate is likely to be higher, given that end-users will have chosen to watch the advertisement in the first place.

This is a definite step forward from the existing pre-roll video ad model, which is profoundly unpopular with viewers, and post-roll video, which largely gets ignored as viewers switch to a new video to watch.

Obviously the efficiency of this approach remains to be seen, and will heavily rely on accurate contextual ad placement. However, if done right, this strikes me as a refreshing and novel idea that will likely yield positive results and favorable conversion rates for advertisers.

LiveRail is currently in closed beta release, and you can request an invitation to the service from the company website. If you are serious about monetizing your online video content, or looking to place relevant video advertising on targeted websites and blogs, it may well be worth checking out further.

Additional Resources

If you would like to learn more about LiveRail, you might want to check out the following links: